Digikore Studios Ltd — Q4 FY25 earnings call

Call held 4 Jun 2025

Management summary

Digikore Studios reported a challenging H2 FY25 with ₹13 crores revenue and a ₹13 crores PBT loss, primarily due to Hollywood strikes and project delays. However, the company is optimistic about FY26, guiding for ₹60-65 crores revenue and a 20% PAT margin, backed by a ₹16 crores order book and new AI SaaS platforms. Management addressed investor concerns regarding transparency and high costs, committing to better communication and a planned ₹30 crores fundraise to reduce debt and pledging.

Highlights

  • Confirmed order book of ₹16 crores, with ₹7 crores from direct projects (CBS, Hulu, Netflix), indicating a shift towards higher-margin work.

  • Launched two AI SaaS platforms, iMadeASong.com and Selfsync.ai, with iMadeASong.com already generating initial revenues of a few lakhs per month.

  • Management committed to increased transparency and more cautious, informed updates going forward.

  • Cost optimization measures undertaken, including a reduction in salary bill from ₹3 crores to ₹2 crores per month for the same output.

  • Industry showing clear signs of recovery post-strike, with major studios pushing forward delayed projects.

Concerns

  • H2 FY25 revenue was ₹13 crores, with a PBT loss of ₹13 crores, significantly impacted by industry slowdowns and high operating costs.

  • A previously announced ₹30 crore contract with Jio Cinema for FY25 was not fulfilled due to delays from the Jio-Hotstar merger.

  • Total receivables stood at ₹39 crores as of H2 FY25, although management stated a net reduction from prior periods.

  • Promoter pledging stands at 38.5% of their 66% holding, though a fundraise is planned to address this.

Key financials

2 periods

H2 FY25

  • Revenue
    ₹13 Cr
  • PBT
    ₹-13 Cr

FY24

  • Revenue
    ₹46 Cr

What they filed

Q4 FY26: revenue up 45.5%, net profit up 133.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue25 22 23 13 34 +36%32 +45%
EBITDA9 4 6 -10 11 +22%11 +175%
Net profit6 3 3 -10 6 +0%7 +133%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Debt Debt disclosed
    • New borrowing Planned fundraise via QIP/Rights/Preferential to reduce debt and release promoter pledging. ₹30 Cr
    So like I mentioned that in the next 3 to 6 months' time, we are looking at a fresh fundraise via a QIP/Rights/Preferential, and it's going to be around INR 30 crores figure. And we are going to be doing that to reduce debt primarily. So once the debt goes, the pledge gets released automatically.
  • Liquidity Liquidity disclosed Total receivables stand at INR 39 crores, with ₹6-7 crores recovered from H1 FY20 receivables. Management expects substantial recovery in the next 4-6 months.
    Our receivables have actually technically come down on FY '20 H1 numbers. We have actually recovered, if you look at our H1 receivables, they were around at INR 42 crores. We have actually recovered around INR 6 to INR 7 crores of that, because if you see in my receivables and our receivables for H2, our total receivables stand at INR 39 crores, which also includes the new business that has come in. So on a net-net basis, we have actually gone down on receivables.

Guidance & targets

Revenue

  • Top-line Revenue Revenue · FY26 · Medium confidence INR 60-65 crores
    So if you ask me, for FY '26, we are looking at almost, on a very conservative level, we are looking at anywhere between INR 60 to INR 65 crores top line, considering the work that we have right now going on.

    — Abhishek More

Profitability

  • PAT Margin Profitability · FY26 · Medium confidence 20%
    So FY '26, even if we are achieving INR 60 crores to INR65 crores, which is what we have in our projection right now, which I believe is conservative and achievable, we are looking at healthy PAT margin of around 20% on that.

    — Abhishek More

What to watch in Q1 FY26

FY26 Revenue Target

FY26
Current FY25 H2 Revenue ₹13 crores
Target ₹60-65 crores

Why it matters

This is the primary financial target for the upcoming fiscal year, indicating significant recovery and growth.

for FY '26, we are looking at almost, on a very conservative level, we are looking at anywhere between INR 60 to INR 65 crores top line, considering the work that we have right now going on.

Risks & concerns

  • VFX industry slowdown due to Hollywood strikes

    high

    The VFX industry, particularly in Hollywood, faced an unprecedented slowdown for 12 months due to writer's and actor's strikes, leading to widespread project delays and cancellations.

    Management acknowledged

  • AI disruption in VFX industry

    high

    Rapid advancement of AI in content creation and VFX tasks poses a significant threat, with management stating companies ignoring AI could shut down in less than 24 months.

    Management acknowledged

  • Project delays and cancellations (e.g., Jio Cinema)

    medium

    Several announced projects did not start or were cancelled, and a ₹30 crore Jio Cinema contract was delayed due to the Jio-Hotstar merger, impacting FY25 revenue.

    Management acknowledged

  • High operating costs impacting profitability

    medium

    High salary costs, particularly from Canadian operations, contributed to the H2 FY25 loss, prompting the company to implement cost optimization measures.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
H2 FY25 performance vs. prior strong outlook Direct
Unfortunately, which was a shock for the industry, the OTT platforms delayed. They did not start immediately on projects. That impacted our numbers for H2, because what we anticipated the project that will start writing in January, they will come into VFX by October, November of '24. But lot of projects which were announced also did not start, they got delayed, many projects got cancelled.

Directly addresses the significant underperformance in H2 FY25 compared to previous optimistic guidance, attributing it to industry-wide project delays and cancellations post-strike.

Asked by Anmol Grover

H2 FY25 revenue and PBT, and transparency Partial
Yes, Anil ji, for sure I can clarify that also. So, what we had done is, when we were talking about exponential growth in the industry, we also had hired several people in our Canadian operations, which was a heavy expense in terms of our salary costs. And with the business being low, they were yet there in the company, and that is why the loss is there.

Challenges the company's reported H2 FY25 financials (₹13 crores revenue, ₹13 crores PBT loss) and questions management's transparency, leading to an explanation of high Canadian operational costs as a reason for the loss.

Asked by Anil Kumar Sharma

Comparison with other listed VFX companies' better numbers Evasive
I actually made a joke of this to some people, because I never like to comment on other people, and I will not also. Yes, but it's surprising that, only listed companies in India are making profits in the VFX industry, nobody else is. So I tell people, if you have to make profits in VFX, at least list in India for VFX, you will get automatically get profits in India.

Highlights a perceived discrepancy in performance compared to peers, which management deflects by questioning the profitability of other non-listed VFX companies.

Asked by Anmol Grover

FY26 guidance and receivables/debt Direct
So I will tell you, to be honest, considering the effects of the strike, considering the impeding impact of AI, we are right now being a little more cautious in our numbers. We want to now back track a little. And I think we have realized now more to give a lower number and achieve more. So if you ask me, for FY '26, we are looking at almost, on a very conservative level, we are looking at anywhere between INR 60 to INR 65 crores top line, considering the work that we have right now going on. ... we are looking at healthy PAT margin of around 20% on that.

Elicits specific FY26 revenue and PAT margin guidance, noting a more cautious approach due to industry challenges and AI impact.

Asked by Anmol Grover

Promoter pledging and plans to reduce it Direct
So like I mentioned that in the next 3 to 6 months' time, we are looking at a fresh fundraise via a QIP/Rights/Preferential, and it's going to be around INR 30 crores figure. And we are going to be doing that to reduce debt primarily. So once the debt goes, the pledge gets released automatically.

Addresses a key governance concern regarding promoter share pledging and outlines a clear plan for reduction through a future fundraise.

Asked by Shivan

Unfulfilled Jio Cinema contract for FY25 Direct
No, no, no. We haven't achieved, because unfortunately, for us also, and fortunately for Disney, they went into a merger with Hotstar. Sorry, Jio and Hotstar merger, due to which a lot of our shows got delayed. Filming for which was supposed to start in October, November, we filmed right now in between March and April. And obviously, because of that, then our client agreements got delayed because of their merger.

Reveals that a previously announced ₹30 crore contract with Jio Cinema for FY25 was not fulfilled due to delays caused by the Jio-Hotstar merger, impacting FY25 revenue.

Asked by Burjot

Overall transparency and disconnect in updates Direct
I completely agree with you, Pradeep ji. It's not that we have done that intentionally. Nothing has been done intentionally in the first place. I think so we just need to be a little more cautious, a little more informed in our information that we provide to our investors. But yes, going forward, you will definitely, I can assure you that you will see a little more transparency. Your point has been taken.

A direct challenge to management's communication and transparency, leading to an acknowledgment and commitment to more cautious and informed updates.

Asked by Pradeep

AI SaaS platform strategy and revenue Direct
So see, currently we have launched 2 SaaS platforms. One is iMadeASong.com, and we recently launched Selfsync.ai. iMadeASong.com has already started generating revenues. Also in fact, we track on a daily basis. Selfsync was just launched literally 10 days ago. We have already started getting traction from companies. ... iMadeASong, like I said, has already started generating revenues. Obviously, it's not generating crores worth of revenues. It is yet generating in the thousands per day. So we are looking at approximately a few lakhs per month.

Provides an update on the company's new AI SaaS platforms, their current traction, and initial revenue generation, indicating a strategic shift towards higher-margin direct client work and IP.

Asked by Priya Jain

2 min read 6 chapters

Detailed narrative

Industry Headwinds and Recovery

The VFX industry faced an unprecedented slowdown in FY25 due to Hollywood writer's and actor's strikes, disrupting productions for nearly 12 months. This led to widespread project delays, cancellations, and a ripple effect across VFX studios globally, including Digikore. However, the industry is now showing clear signs of recovery, with major studios pushing forward delayed projects, and Digikore has a confirmed order book of ₹16 crores.

FY25 Financial Performance and Challenges

The second half of FY25 was significantly impacted by these external circumstances, with the company reporting a revenue of ₹13 crores and a PBT loss of ₹13 crores for H2 FY25. This underperformance was attributed to project delays and cancellations, as well as high operating costs, particularly from Canadian operations where staff were retained despite low business. In contrast, FY24 revenues were ₹46 crores.

FY26 Guidance and Order Book

For FY26, Digikore is cautiously guiding for a top-line revenue of ₹60-65 crores, reflecting a more grounded approach given past industry disruptions and the impending impact of AI. The company also targets a healthy PAT margin of around 20% for FY26. Currently, Digikore has a confirmed order book of ₹16 crores, with ₹7 crores from direct projects with CBS, Hulu, and Netflix, and an additional ₹8 crores worth of projects in the bidding stage.

AI Strategy and SaaS Platforms

Digikore is actively embracing AI, viewing it as a critical transformation for the creative ecosystem. The company has launched two AI SaaS platforms: iMadeASong.com (B2C) and Selfsync.ai (B2B). iMadeASong.com is already generating initial revenues of a few lakhs per month, and Selfsync.ai, launched 10 days prior to the call, has received demo requests from over 30 companies. Digikore is also working with three international companies to automate VFX tasks like rotoscopy and compositing to protect against AI disruption.

Receivables and Debt Reduction

The company's total receivables stood at ₹39 crores as of H2 FY25, which management states is a net reduction from prior periods after recovering ₹6-7 crores. To improve liquidity and reduce debt, Digikore plans a fresh fundraise of approximately ₹30 crores via QIP/Rights/Preferential in the next 3-6 months. This fundraise is primarily aimed at debt reduction, which will also lead to the release of currently pledged promoter shares (38.5% of 66% holding).

Transparency and Investor Trust

Management acknowledged investor concerns regarding transparency and the disconnect between previous optimistic updates and actual financial results. They committed to providing more cautious, informed, and transparent updates going forward, focusing on reporting what has actually happened rather than industry-wide expectations. This commitment aims to rebuild investor trust after a challenging period.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Media, Entertainment & Publication earnings calls